Dwight Popowich fought with the oil and gas industry and the Alberta government for more than a decade to have an orphaned gas well on his 75 acre property near Two Hills capped and cleaned.
Weeks ago, a crew from the underfunded Orphan Well Association (OWA) arrived to do the long overdue work.
He’s happy to see them, but thinks it’s only because he’s been a “squeaky wheel.”
“Last August we were told it would be another ten to twelve years and suddenly they’re here. I really think it’s an attempt to try to quiet me down,” Popowich said in an interview with TheRockies.Life.
It won’t keep him quiet.
On July 2, Popowich, a lifetime conservative voter, filed a conflict of interest investigation request against David Yager through the Alberta ethics commissioner.
Yager is a longtime oil and gas industry insider and consultant. He has received hundreds of thousands of dollars in sole source contracts with the provincial government and works as a special advisor to Premier Danielle Smith who tapped him to head up the Mature Assets Strategy process.
He also sits on the board of the Alberta Energy Regulator (AER), which is supposed to regulate the industry and fund the OWA.
Popowich said it reeks of conflict of interest.
Unsellable land
Popowich and his wife bought their property 26 years ago to raise their family. He grows alfalfa on 50 acres and the rest is forested with hiking and skiing trails. When he retired several years ago, the couple thought about selling.
However Popowich said it quickly became clear that no buyer would touch the property with a 10-foot pole knowing that it came with an inactive and toxic well site.
He points out that his is one of an estimated 170,000 abandoned wells in Alberta. Many of them are leaking toxic gasses into the air and chemicals into the soil that farmers need to grow their crops.
He became an orphaned well activist out of sheer frustration with the Alberta Energy Regulator and its willingness to let oil and gas companies walk away from their mess and make off without paying rural property taxes.
According to the Rural Municipalities of Alberta, these companies have stiffed communities for more than $250 million in taxes.
“I thought everything was fine in the oil patch and within our government, that they had to handle all this. No, they don’t. Not at all. If the average person in Alberta were to look behind the curtain, they’d be shocked by what’s really going on. All these conservative governments for years and years and years basically dropped the ball. They haven’t been looking after us,” Popowich said.
Levies too small
The AER created the OWA in 2002. The association is industry-funded through a levy charged to oil and gas companies.
The money is then directed toward cleaning up orphaned wells left behind by companies that have become insolvent or bankrupt.
But by any measure, the OWA is a failure. The levies charged are too small to keep up with the demand. The association is facing a predicted shortfall of $1.2 billion, according to a study by Drew Yewchuk, formerly a staff lawyer with the University of Calgary’s Public Interest Law Clinic.
And it’s falling behind on cleanup. The number of sites needing work has grown steadily. According to the OWA, there are currently 4651 sites, including 3874 wells, that need to be decommissioned and over eight thousand sites requiring reclamation.
That doesn’t include tens of thousands of other wells that companies have left inactive.
“That was the industry’s promise to us, that they would clean up the wells,” Popowich said.
In his view, and that of many other rural Albertans, oil and gas broke its promise.
Popowich said the AER has made matters worse by being more of a facilitator than a regulator of industry. A big problem is not keeping companies to strict timelines for well cleanup and reclamation. Another is allowing companies to sell off poorly producing or marginal wells for pennies to the dollar to underfinanced and inexperienced start-ups. He said it’s known as “liability dumping.”
In 2016, Perpetual Energy Inc. sold 2,000 old wells to Sequoia Resources for $1.
Less than two years later, Sequoia went bankrupt and walked away from these wells, one of which is the shallow gas well on Popowich’s property.
Abandoned wells, unpaid taxes
The Mature Assets Strategy, which could be adopted by the UCP government this fall, is meant to fix Alberta’s ballooning abandoned well problem.
However critics are calling the strategy a sham that favors industry. It’s short on details and could stick taxpayers with clean-up bills through a proposed publicly-funded pool of cash. It also doesn’t offer anything concrete to rural municipalities trying to collect property taxes from delinquent oil and gas companies.
David Yager was paid $292,000 to lead the development of the strategy.
“That’s why I’ve taken a complaint to the ethics commissioner. This is an oil and gas insider who is doing a favor for oil and gas and that’s it,” Popowich said.
“Very Troubling”
Susan Calabrese is the Calgary-based lawyer with Ecojustice who filed the complaint on behalf of Popowich.
She thinks he has a strong case.
Calabrese also said that Yager was on the Ecojustice radar well before Popowich approached the legal non-profit organization for help with his complaint.
“Yager hands out business cards that say he’s a special adviser to the premier. His website advertises he’s a longtime consultant for the oil and gas industry. He’s also on the board of directors for the Alberta Energy Regulator, which is supposed to stand at arms length from outside influences. And then he took two different public contracts for almost $300,000 in taxpayer money to lead the mature asset strategy,” Calabrese told The Rockies.Life. “This is something that is supposed to tackle the very serious problem of inactive wells in Alberta, of which there’s hundreds of thousands depending on how you slice it.”
When you factor in Yager’s claim to be a key Danielle Smith fundraiser and supporter, Calabrese said there are plenty of red flags fluttering above his appointment to lead the Mature Asset Strategy.
“It’s very troubling,” she said.
Rural farmer fights back
Industry bias shows in the strategy. Calabrese called it vague in many different places and geared overall at increasing the health of a certain part of the oil and gas industry at the expense of landowners.
It’s unlikely that the ethics commissioner will be able to send the Mature Assets Strategy back to the drawing room.
Calabrese said it’s being fast-tracked behind closed doors and could go to a vote in the legislature as early as October.
“If you have a flawed process, you’re going to get a flawed outcome. Even if you’re in the oil and gas industry, you still want companies to clean up their own mess, right?” Calabrese said. “I hope that the public, our lawmakers, and those who are still pushing forward this Mature Asset Strategy stop and think, is this really in the best interest of the taxpayer given what it says and what we know of the circumstances around it.”
Popowich is convinced it’s not in the public interest.
“We don’t have the ear of the government. That’s why I’m speaking out. It’s always been an unfair playing field. People need to understand that when oil and gas shows up at their place and says they want to drill a well on their land, you can’t say no,” Popowich said. “I think here in rural Alberta, people are starting to wake up.”
